ADAS report that a generally warm and dry last week has seen the UK winter wheat harvest advance to 50% done. This is slightly ahead of the six-year average, with rapid advancement this week making up for a slightly delayed start to the wheat harvest.

Yields are variable but close to average overall, with the poor yields onsecond wheats counteracting the good first wheat yields. Quality is generally good, they say, with hagbergs less affected by the recent rains than expected.

ADAS say that specific weights are good, ranging from 72-78 kg/hl on second wheats and 75-78 kg/hl on first wheats. Proteins are in the region of 12-13%. Further good news comes from reports that most samples that have been tested to date have shown low levels of mycotoxins, with the majority of tests coming in below the 1250 ppb limit.

The winter barley crop is just about finished at 99% done, they estimate. Yields have been variable at 5-7.5 MT/ha, they add. Much of the winter barley is likely to end up in the feed market, they warn.

Spring barley is 45% harvested in England and Wales, but only 8% done in Scotland, with yields close to average around 4.5-7.0 MT/ha. This is slightly later than the English and Welsh six-year average, they say.

For oats 30% of the UK area has been harvested, with yields again around average at 5.5-7.5 MT/ha.

The winter rapeseed crop is just about finished at 96% harvested, with average yields overall in a range of 2.5-5.0 MT/ha. No spring rape has been cut yet, they conclude.

September beans closed at $10.23, up 23 ¾ cents, with November at $9.73, up 16 cents. A weaker dollar, and firmer crude and equities helped beans today. China purchased 896,000 MT of new crop US soybeans this week which certainly helped the cause also. News that the Argy senate was to extend President Cristina Fernandez's powers to set export taxes on grains, resurrected uncomfortable memories of roadblocks and sales embargoes by militant Argy farmers. A cold US weather outlook for the weekend is also keeping traders nervous. The well-touted Pro Farmer crop tour has been doing the rounds, they peg the 2009 US soybean crop at 3.15 billion bushels, a little lower than the USDA's estimate of 3.199 billion. They have average yields at 41 bu/acre, compared with 41.7 bu/acre from the USDA. A CFTC report showed an overall sharp reduction in both the Large Spec and the Index Funds longs on the week.

Corn

September corn closed at $3.21 ¾, up 3 ¼ cents and December at $3.26 ¼, up 2 ¼ cents. As with beans, today's CFTC report showed that this week's announced toughening up on traders legally flouting exchange limits had had a strong reaction. Index Funds decreased positions by 2,544 contracts and Large Specs decreased their net long by 21,879 contracts. A much colder than normal weekend was supportive, although warmer weather is on the cards to return next Tuesday. This is potentially more of a problem for later harvested corn than beans. The Pro Farmer crop tour peg this season's US crop at 12.807 billion bushels, a little higher than the USDA's 12.761 billion.

Wheat

September wheat closed at $4.60 ¼, down 8 ¾ cents. Stats Canada pegged the crop there at 23.61 MMT, 17.5% lower than last year, although this figure was above the range of analyst's estimates. Output in Ukraine, now the world's fifth largest exporter, is also seen lower than last season at around 21 MMT, but higher than earlier projections of 18-19 MMT. Forecasts are also creeping up in Russia too. Wheat acreage in Argentina is down to a 100 year record low due to drought and political reasons, rain is needed for crops that have been planted in the central part of the country.

Having traded higher for most of the day, EU wheat gave up some of those gains by the close to finish the day posting only slightly higher levels.

November Paris milling wheat ended up EUR0.25 at EUR126.75/tonne, with London November feed wheat ending up GBP0.25 at GBP96.25/tonne.

It was another day of stalemate for wheat, with buyers confident that the recent steep price declines will continue further, whilst sellers are reluctant to sell the most expensive crop ever to produce at current levels.

There was little fresh news on the export front, and EU farmers are content to busy themselves wrapping up what is left of the harvest.

Toepfer now estimate Germany's wheat crop at 26 MMT, the same as last year, whilst the farming organization DBV peg production at 25.7 MMT and the association of German farm cooperatives have it at 26.2 MMT.

Stats Canada pegged the wheat crop there 17.5% down on last year at 23.61 MMT, although this was higher than the kind of number most analysts had been expecting.

Spring wheat harvesting and development is way behind schedule in the US, giving way to some serious quality concerns. It would seem that maybe it's going to be the US that have more feed wheat than they know what to do with this harvest.

Wheat planting in Argentina is just about done, with a record low of just 2.7 million hectares in the ground.

News that the Argy senate was to extend President Cristina Fernandez's powers to set export taxes on grains, resurrected uncomfortable memories of roadblocks and sales embargoes by militant Argy farmers.

A cold US weather outlook for the weekend is also keeping traders nervous.

News from a crop tour doing the rounds in the US seems perhaps to favour corn to be the most likely crop to chip in with bumper yields this season. Some of the comments on beans have been a little more guarded.

Early calls for the final session of the week, which can't come bloody soon enough for me, are: corn called 2 to 4 higher; soybeans called 18 to 22 higher; wheat called flat to 2 higher.

Stats Canada are out today with their first crop estimates for the 2009/10 season. the survey was conducted from July 27 to August 4 and covered 14,600 Canadian farmers.

In the West, late germination caused by unfavourable conditions this spring has held back progress by about two weeks compared with normal. Yields will drop for all major crops compared with 2008. In the drought-stricken areas of Saskatchewan and Alberta, higher than normal abandonment was also shown to be a factor in the loss of production, they said. Whilst in Ontario and Quebec, excessive moisture and cool growing conditions held back growing progress.

They peg Canadian all wheat production at 23.61 MMT, which is higher than any of the trade estimates, and curiously exactly 5 MMT down on last year, representing a fall of 17.5%.

Barley output is seen at 8.95 MMT, they say, towards the low end of trade estimates, and a 24% reduction on last year's 11.781 MMT. Production was most affected by lower plantings and yield potential in Alberta, they said.

Canola production is estimated at 9.54 MMT, again towards the low end of trade ideas, and 24.5% down on last season's 12.642 MMT. Canola production on the Prairies should decline considerably, as a result of a reduction in area harvested and lower yields, with the largest declines coming in Alberta, they added.

Stats Canada are due out later this afternoon with their first estimates of the season on Canadian crop production this year. The report is based on a survey conducted at the end of July, it's highly debatable whether things have got better or worse since then.

Sharp production losses are expected across all the grains, with all wheat estimates ranging from 20.10-23.31 MMT compared to last year's Stats Canada number of 28.61 MMT.

Barley production is estimated at 8.75-9.47 MMT, down from 11.781 MMT a year ago, and canola output is seen in a range of 9.50-10.75 MMT, compared to 12.642 MMT last season.

Crop development is widely seen at 2-3 weeks behind schedule, leaving production further under threat later in the growing season. Frost typically arrives on the Canadian Prairies around mid-September.

September corn closed at $3.18 ½, down 1 ½ cents. and December at $3.24, down 3 ½ cents. Weather remains favourable and losses in crude also limited upside potential. Below normal temperatures in Indiana and Ohio, where the corn crop is already delayed, will continue to delay maturity because of the lack of growing degree days. Though corn was planted on schedule in late April and early May, northern Iowa and Minnesota corn development is now lagging two weeks behind schedule after a super cool July, says influential weather analyst Gail Martell. Weekly export sales were very strong at a combined 1,435,476 MT.

Soybeans

September soybeans closed at $9.99 ½, up 2 ½ cents, whilst November was at $9.57, down 1 cent. The USDA announced another soybean sale to China for 2009/10 delivery of 165,000 MT. That brings total sales announcements to 663,000 MT (24,631,073 bushels) this week so far, on top of today's weekly export sales of a combined total of 858,000 MT. Weather conditions remain favourable, although a late crop will stay susceptible to an early freeze.

Wheat

September wheat closed $4.69, up 3 cents. Export sales today were a combined total of 393,862 MT which was in line with expectations. US spring wheat, which was late planted, continues to lag behind on normal development. Wednesday’s sale of 120,000 MT of US wheat to Egypt helped support. Increased production estimates across large parts of Europe appear set to keep a lid on advances for now.

EU wheat futures closed with little change, in a stalemate between producers and sellers.

Farmers don't care very much at all for current levels, but with prices having fallen rapidly buyers are also in no hurry to book forward requirements either.

Paris November milling wheat closed down EUR0.75 at EUR126.50/tonne, whilst London November feed wheat finished unchanged at at GBP96.00/tonne.

European crop production numbers are now becoming more firmly established, with output in France and Germany each a million or two tonnes higher than was thought earlier in the year.

Although production in Eastern Europe is down, things aren't quite as bad as was feared earlier. Ideas of output in Ukraine were 18-19 MMT a few months ago have now given way to thoughts of production of around 21 MMT. Still 19% down on last year's 25.9 MMT, but better than what was expected.

The overnight session closed with little change either way, beans finished around 2 cents higher, with corn and wheat flat, fractions either side of unchanged.

Export sales were very robust for corn, coming in close to 1.5 MMT, with soybeans also putting in a strong show, with once again China taking the vast majority of both old and new crop sales. Wheat sales were in line with projections.

China booked a further 205,000 MT of soybeans overnight, and Japan took 126,000 MT of mostly US wheat.

For now the US weather remains largely favourable and non-threatening, with good potential for some very decent yields in many states. However, night time temperatures will drop to 12 degrees below normal on Saturday morning over the Western Corn Belt, says Allen Motew of QT Weather. Similar departures a month from now would bring frost, he warns.

Yesterday's news that the CFTC is to get tough on trading limits is keeping the market cautious.

Various news reports in circulation suggest that the trade is generally relaxed about the situation developing in India.

"However bad the situation gets this year, you can still rule out any need for wheat and rice imports," Reuters quotes one "expert" as saying.

The Indian government is also relaxed saying that it has sufficient grain stocks to last thirteen months. How convenient is that, as thirteen months gets us to the end of next year's monsoon season.

The maths don't stack up in a country that consumes 92.4 million tonnes of rice and 77.6 million tonnes of wheat every year. I suppose that they could always "let them eat cake" when the rice and bread runs out?

Early calls for this afternoon's CBOT session: corn called steady to 2 higher; beans called 2 to 5 higher; wheat called flat to 2 higher.

For the week ended Aug 13, the USDA today reported the following weekly export sales:

Corn

Net sales of 1,435,500 MT consisted of 577,000 MT of old crop and 858,500 MT of new crop. Japan (319,400 MT) and Egypt (184,800 MT) took the bulk of the old crop, with new crop sales primarily going to unknown destinations (237,500 MT), South Korea (171,000 MT), Egypt (120,000 MT), and Japan (106,200 MT).

Soybeans

Net sales of 858,000 MT included 274,900 MT old crop and 583,100 MT new crop. China (222,000 MT) took the lion's share of old crop with the bulk of new crop going to China (393,000 MT), and the alternative spelling of China "unknown destinations" (108,000 MT).

Canadian grains and oilseeds are suffering from delayed maturity opening the door for potential freeze damage, whilst canola in Alberta also has suffered from drought, says Gail Martell of Martell Crop Projections.

Frost is the number one concern in Alberta, according to the August 15th crop report, due to cold, dry spring weather that delayed planting. A severe drought was alleviated by heavy rainfall from mid July to mid August, but storms this past week also damaged crops. Drought was so severe to begin with that in some areas, canola seeds did not even germinate until July, says Gail.

Alberta growers claim there is no hope for a normal yield. Farmers rated their spring wheat 22% good-excellent, 45% fair and 33% poor to very poor on the August 13 crop report. Canola conditions were even worse, with 36% of the crop poor to very poor, she adds.

Western Saskatchewan also suffered from drought but rainfall picked up substantially in July leading to favourable growing conditions, and moisture has continued to improve in August. Growers reported that 71% of provincial farms had sufficient field moisture for developing crops. The overriding concern here is that frost may damage immature crops, she says.

Crop development in some areas is 3 weeks behind schedule. Most of the crops are 2 weeks behind normal developmentally. If frost holds off until late September, canola would have a chance to make a good yield, but frost typically arrives September 10-20, says Gail.

Manitoba began the growing season with ample field moisture, thanks to heavy snowmelt, but flooding delayed seeding and cut the area that was intended to be planted in wheat. Summer growing conditions have been favourable, for the most part, but small grains are maturing very slowly due to delayed seeding date and cool June-July weather.

Manitoba small grains were just beginning to turn colour in mid August, as most of the crop was in the heavy dough stage. Growing degree days have been 150-200 units behind normal due to very cool growing season, Gail concludes.

After a couple of days consolidating from all-time highs hit late last week, London white sugar futures are back on the upside today, with October currently up $12.80, or 2.3%, at $570/tonne.

A report on Reuters suggests that the Indian government is set to introduce new legislation that would prevent large companies such as Nestlé and Coca-Cola carrying more than 15 days worth of supply of domestic sugar.

Such companies will however be allowed to stock imported sugar beyond 15 days worth of consumption, which will potentially lead to a sharp increase in imports.

India's farm minister said that sugar production prospects this season were "not bright" in the world's largest consumer, after the poor rainy season.

The government are also said to be considering raising the compulsory amount that local sugar mills must sell at low state-set prices from 10% to 20%, as it attempts to stave off rising food prices without having to dip into it's own coffers.

It's already been a tough year for Indian farmers, with monsoon rains 27% below normal June 1 to Aug. 18, according to Reuters.

In the cane growing north west things are even worse, here rains are 37% lower in the period that normally provides around three quarters of the nations rainfall for the entire year.

The government are playing down the seriousness of the situation in the run-up to the elections, despite an alarming increase in suicides in rural communities, in a country where up to 70% of the population are dependent on farm incomes.

There's no need to press the panic button yet, the government have re-assured the people, saying that they will release around 5.5 MMT of wheat and rice from state reserves to stem rapidly rising domestic food prices.

According to media reports, the government held 18.79 MMT of rice and 31.62 MMT of wheat in reserves as at the end of July.

That might sound like a lot, but in a country with a population the size of India (circa 1.1 billion) it represents less than two and a half months worth of rice consumption and less than five months supply of wheat.

Last week the USDA cut it's estimate of rice production this season by 15.5 MMT from it's July prediction to 84 MMT, around 9 MMT lower than domestic consumption.

There is no official word yet on wheat production estimates for 2010's crop which will be harvested next March/April. With wheat demand forecast to rise, due to shortfalls in rice production, that 31.62 MMT is going to start disappearing very rapidly in a country that normally consumes around 6.5 MMT of wheat a month.

Various media reports suggest that there is virtually no wheat left in private hands in India.

Lets do a little bit of random Nogger maths...

Wheat stocks 31.62 MMT divided by consumption of 6.5 MMT = 4.86 months of supply from the end of July, ie enough to last until Christmas.

That leaves India having to buy all it's domestic wheat requirements for at least Jan/Feb, and probably some of it's March needs too, lets say half of March, that comes to 16.25 MMT.

And suppose that wheat production is down on the back of the poor monsoon season? India only normally just about manages to cover it's own 77 MMT domestic requirement as it is.

We are starting to talk telephone numbers here.

They might need 16.25 MMT just to get them through to next harvest, plus next season could throw up a deficit, and all of that is still without building any reserve stocks whatsoever. And we haven't even factored in any extra demand yet either.

Blimey. Oh, and they've got no cash. And erm, the storekeepers might be lying, and there might not be 31.62 MMT in store at all. Why not buy it all on Milk Link terms?

"Hello, it's Milk Link Mumbai office here, yes it is very hot isn't it. I'd like to try 6.5 MMT of your free wheat every month for six months. If we like your wheat then we'll take an option to pay for it after that. No, don't hang up, I'll have 10 MMT of rice and you can throw in a pickle tray as well. You do deliver don't you?"

Harvesting has drawn to a close in Bulgaria with final wheat production seen at a very precise 3,636,313 MT, 18% lower than last season, according to the Chief Directorate on Agriculture with the Agriculture and Food Ministry.

Yields this year came in at 3.28 tonnes per hectare, and 47.7% of the crop is of milling quality, he said.

The winter barley crop produced 797,692 MT, gathered at an average yield of 3.38 tonnes per hectare. Spring barley produced 45,451 MT, with an average yield of 2.7 tonnes per hectare.

Winter oilseed rape came in with an average yield of 2.21 tonnes per hectare, with production totalling 226,160 MT.

The Directorate added that, as it was his birthday, he'd be enjoying sex with Mrs Directorate at precisely 11.32 and 45 seconds this evening. And at 11.33 and 17 seconds he'd be lighting his pipe and trying on his new slippers.

The overnight markets are mixed, with beans higher, corn up a tad and wheat a little lower.

China bought 205,000 MT of new crop US beans last night. The USDA will report on weekly export sales at 13.30 BST. For soybeans estimates range from 300,000 to 700,000 MT, for corn 700,000 to 1,000,000 MT, and for wheat 350,000 to 550,000 MT.

An announcement by the CFTC that it was going to get tough and enforce the 6,500 contract limit on two companies that regularly flouted regulations has got the wheat market in a panic.

The companies concerned, Deutsche Bank and one other un-named entity will now no longer be able to legally evade the trading limits for wheat. One report suggests that the two are currently long of 60,000 contracts.

The Canadian grain harvest is said to be a month behind normal, due to a combination of late planting and unfavourable weather conditions. That potentially leaves it very vulnerable to a hard freeze.

Monsoon rains continue to be poor across many parts of northern India, where food prices have already risen by around 30%. The government are said to be set to release a reported 3 MMT of wheat and 2.5 MMT of rice onto the domestic market in an effort to quell further price rises.

Indian rice production is said to be 10 MMT down in 2009, whilst sugar output will fall to 15 MMT (7.5 MMT below consumption) and pulse output is likely to be only 13 MMT compared to demand of 17-18 MMT.

A shortage of these basic staples is expected to increase demand for wheat, although it would seem that government reserves are only sufficient to last until Christmas, three months before harvesting begins.

We also have the small matter of where is the money going to come from to buy in this shortfall in basic food commodities, in a country with a population of over one billion.

Crude oil is up after a US Energy Dept report showed that stocks fell by a very surprising 8.4 million barrels last week.

September corn closed at $3.20 up 5 ½ cents, and December corn at $3.27 ½, up 5 cents. Short covering oversold of corn following a sharply higher crude oil market helped corn today. Crude futures rose more than $3 today, settling up 4.7 percent at $72.42 per barrel after a government oil inventory report showed an unexpected crude oil supply drop last week. Estimates for tomorrow’s weekly export sales report range from 700,000 to 1,000,000 MT.

Soybeans

September soybeans finished at $9.97, up 1 ½ cents, and November beans at $9.58, down 1 cent. USDA announced another soybean sale to China for 2009/10 delivery of 205,000 MT. That brings total sales announcements to 498,000 MT (18,298,363 bushels) this week so far. Export sales estimates for tomorrow’s weekly USDA report range from 300,000 to 700,000 MT. Soybean pod counts were well below average on one Illinois route of the 2009 Pro Farmer Crop Tour, according to trade reports.

Wheat

September wheat ended at $4.66, down 4 ½ cents. One of the main factors for wheat today was the CFTC ruling that a unit of Deutsche Bank and one other un-named entity would no longer be able to legally evade the trading limits for wheat. Commodity funds sold an estimated 3,000 contracts today, adding to their short positions. Estimates for tomorrow’s weekly export sales report range from 350,000 to 550,000 MT.

EU wheat futures continued their seemingly inexhaustible decline Wednesday, with Paris November milling wheat closing down EUR1.00 at EUR127.25/tonne, and London November feed wheat ending down GBP0.25 at GBP96.00/tonne.

Harvest pressure, and reports of better than expected yields out of France and Germany continue to add downwards momentum.

It's currently quite difficult to see how much lower things can get, but lower they undoubtedly will go. The one consolation is the old adage that markets always over-react, to the downside as well as the upside.

Egypt bought 270,000 MT of wheat today, but only 60,000 MT of that was French, the rest made up of US, Russian and Canadian wheat.

Very few people seem to be looking at the Indian situation developing in the wings. For now at least, the market is full of doom and gloom.

The bears continue to have their way for the time being. Although it wasn't that long ago that every man & his greyhound was so bullish it was unbelievable.

Every greyhound has his day. Apart from trap six, with the Newcastle shirt on, they're just plain unlucky!

The Indian government is set to release up to 5 MMT of wheat and rice from it's strategic reserves onto the domestic market, according to Indian media reports.

The move will come in an attempt to stem recent price rises due to shortages of supply of both commodities on the open market ahead of the festival season, they say.

According to the reports the government held 18.79 MMT of rice and 31.62 MMT of wheat in reserves as at the end of July.

Now here's an interesting thought, local reports suggest that there is virtually no wheat left in private hands in India, it all belongs to the government after they emerged as aggressive buyers back in March/May when the crop was harvested.

Domestic wheat consumption is seen at just shy of 77 MMT in 2009/10 according to the USDA, which equates to almost 6.5 MMT/month, and that's before we factor in any increase in demand due to a shortage of rice.

If the government's stocks really were 31.62 MMT (and they may well have been less in reality, you know what those boys are like, it's not easy to nail wheat to the floor so it doesn't "go away") at the end of July, that's only five months supply, meaning that wheat in India will run out by Christmas.

And harvesting doesn't start until March.

No wonder the government are having to have their arms twisted to let some wheat go now. And where is the money going to come from to import the stuff in the new year?

The overnights closed lower again with beans down around 14 cents, wheat a cent lower and corn off 2-3 cents.

Soybeans have been the one bucking the trend of late, so it maybe should be no surprise that they are now falling the fastest.

China only managed to sell 400 MT of soybeans of the 500,000 MT on offer in today's government auction. There is now talk of a subsidy being offered to encourage more buyers to step forward, which would obviously dent US export hopes. Although with old crop stocks very tight, and this seasons harvest likely to be 2-3 weeks behind schedule this might not be a bad thing.

US weather continues to play ball and yields look like potentially being a record, if the frost stays away.

The USDA currently peg the US corn yield at a record 161.4 bushels/acre. Whenever Midwest summer temperatures have been exceptionally cool in the past, the national average corn yield has finished 10% above trend or higher, according to Gail Martell of Martell Crop Projections. The coolest recent summers occurred in 1982, 1985, 1992 and 2004. In all of those years corn yields were well above trendline. Summer temperatures in 2009 are on the threshold for exceptional coolness, averaging 1.56 F below normal through August 15th, she says.

European wheat futures continue to decline on news of better than expected yields out of France and Germany.

So far today has been another perfect storm day with a firmer dollar, weaker crude and equities all combining to add more bearish pressure to the grains complex.

The US Energy Dept is set to report on crude oil and gasoline stocks later today. Yesterday the American Petroleum Institute said that crude stocks fell by more than 6m barrels last week, contrary to an anticipated increase. If the EIA concur, as they do around 75% of the time, then we could see oil shoot up this afternoon, with the potential to spill over into the grains.

Early calls for this afternoon's CBOT session: corn called 2 to 3 lower; soybeans called 10 to 15 lower; wheat called 1 to 2 lower.

SovEcon have increased their Russian wheat production estimate for the current crop to 56.8-59.0 MMT, spookily confirming my ouija boardesque predictions, and conveniently proving that the USDA don't know what they are talking about to boot.

Then again, the USDA don't have much of a track record at getting the size of the US crop right so what chance have they got in Russia?

Umbrella sales are down in India, where monsoon rains are now 27% lower than normal from June 1st to Aug 17.

The Indian farm minister says that 246 of the country's 625 districts are now affected, with the north west of the country the worst hit. That number officially stood at 207 only two days ago.

Production of sugar cane, rice and cotton are all seen sharply lower this season in a country with almost 1.1 billion people to feed.

The government have now put a limit on the quantity of pulses and sugar that traders can hold, in an attempt to prevent hoarding and profiteering.

Citigroup on Tuesday cut its estimate for Indian growth in 2009-10 to 5.8%, down from 6.8%, because of a downturn in the farming sector. it also increased its inflation forecast to 6% from 4% citing rising food prices.

Cargill reported a 69% drop in Q4 earnings yesterday, chipping in with a measly $327 million, compared to a monster "would you like to go large with that" $1.05 billion in the previous year.

The global recession was to blame: "The path to economic recovery may well be uneven," said Cargill CEO Greg Page.

He's obviously never been down the Dock Road in Liverpool. That's what uneven looks like Mr Page.

Full year earnings were only 16% down, buoyed by a strong first half, at a paltry $3.33 billion.

Generous and shy Cargill donated $5 million to world hunger last year. Three cheers for them.

By my calculations that's the equivalent of 600,000 kebabs (with everything on), or just about enough for one a day for every man, woman & child in Swinderby for two years. Not enough for a potion of chips as well, mind. And if you want a can of coke to wash it down with, forget it. The tight bastards.

The pound reverted to type this morning, falling by around 2 cents against the dollar after the release of the minutes from the BoE's MPC meeting earlier this month.

The market is now trying to decide if yesterday's better-than-expected inflation figures were simply a one-off blip on the road to Hades.

The minutes showed that three of the MPC members (including Merv the Swerve himself) wanted to increase QE by even more than the £50 billion that was passed. That would seem to suggest that we should all be looking to buy shares in the company that supplies the ink and paper to the Royal Mint.

The prospect of more QE somewhere down the line (November seems to be a popular choice with the pundits) sent the pound tumbling below $1.64, having earlier been punching above it's weight at close to $1.66.

The HGCA say that although the wheat market has fallen the best part of £40/tonne since the beginning of June, there's still a decent margin to be had planting wheat for next season.

Margins are however around £100/ha down on where they were twelve months ago, as sharply lower grain prices have far outweighed lower input costs, they say. But, hey, a margin is still a margin, with milling and first feed wheats offering the best returns.

If their figures are correct, selling Nov 2010 feed wheat now at £105/tonne still offers a potential return of £585/ha. Break-even on first feed wheat is only £38.52/tonne, anything above that and your in profit!!

Corn prices finished slightly higher, with September corn at $3.14 ½, up ¼ cent, and December closing at $3.22 ½, up ¾ cent. Weather continues to be mostly favourable with normal temperatures and timely rains in most of the corn region. The USDA pegged the national average corn yield at 161.4 bushels per acre on the first official report on August 12. If realized, this yield would be higher than the previous record 160.4 bushels per acre set in 2004, and would result in a harvest 12.76 billion bushels of corn., says Gail Martell of Martell Crop Projections.

Soybeans

September soybeans closed at $9.95 ½, up 7 ½ cents, with November beans at $9.59, up 4 ½ cents. A late recovery in crude oil helped beans this afternoon, along with China being in the market the past couple of days for more soybeans. Crop progress is still lagging with beans only 72% setting pods compared to 85% for the five year average. China will hold another auction for 500,000 MT of government-held soybean stocks tomorrow. Sales so far have been less than impressive, however reports that the government are said to be considering a 200 yuan/tonne ($29.26) subsidy to soybean crushers to encourage them to purchase government stocks might help.

Wheat

September wheat at $4.70 ½, down 1 ¼ cents. The crop progress report Monday night showed 94% of the winter wheat is harvested, in line with normal. However only 13% of the spring wheat crop is harvested compared to 33% last year and 48% for the five year average. Canadian weather is forecast to turn cool and wet during the next few days delaying harvest and spring wheat development. Spec funds added to their wheat shorts today, continuing to drive the market lower.

Or something like that anyway. It seems like the wheat market is continuing to slip slide away, until we reach our destination. How low will that destination be? For London wheat I'd have to hazard a guess that starts with an eight.

Today, Paris November milling wheat closed down EUR0.25 at EUR128.50/tonne, whilst London November feed wheat ended down GBP0.40 at GBP96.25/tonne.

The bears have it at the moment, we are in the middle of harvest, yields are looking pretty good in France and Germany, and end-users seem to have it all their own way.

From the farming point of view there are only a few weapons left:

Don't plant anything for 2010, pretty radical I know, but if the cost of production really is below the selling price then why bother??

The overnights closed lower, giving up earlier highs, with beans ending around 10 cents lower, wheat down around 3 cents and corn off in the region of 2 cents.

Crude oil moved lower during the morning, which was sufficient excuse for the grains to work easier too. Early in the session a weak dollar had been supportive, and some consolidation from recent steep losses was also in evidence.

The US weather continues to provide little in the way of short-term threats, and production for corn and beans looks like being bumper in 2009.

For corn Monday night's crop progress report continues to indicate that although conditions remain good, progress is lagging, with only 40% of the crop at the dough stage, compared with 64% normally. The crop was 9% dented, below the average of 26%, although good to excellent ratings held steady at 68%. Soybeans are 72% setting pods compared to 85% for the five year average. The crop progress report showed 94% of the winter wheat is harvested, in line with normal. However only 13% of the spring wheat crop is harvested compared to 33% last year and 48% for the five year average.

It is this late development that may provide a tail-end threat at the back end. With maturity some 2-3 weeks behind normal, frost could potentially be a problem, should it manage to push into the Midwest before harvesting commences.

China will hold another auction for 500,000 MT of government-held soybean stocks tomorrow. Sales so far have been less than impressive, however reports that the government are said to be considering a 200 yuan/tonne ($29.26) subsidy to soybean crushers to encourage them to purchase government stocks might help.

Early calls for this afternoon's CBOT session: corn called steady to 3 lower; soybeans called 8 to 12 lower; wheat called 2 to 5 lower.

The stalled monsoon rains this summer across large swathes of northern India are set to see rice production in the country fall from 99.15 MMT in 2008 to just 84 MMT this year, according to the USDA.

Kariff rice production only has a short growing season, being sown from mid-May through to the end of August, and harvested October through to January. Rice acreage is estimated down around 20% this year, which is seen having a knock-on effect in demand for winter sown wheat.

The country relies on the monsoon season to provide almost three-quarters of the year's rain. So far this season rains have been 29% lower than normal (1st June - 12th Aug) on a national level, and considerably more than that in many parts of the breadbasket northwest of the country.

The government have been moved to assure the public that strategic reserves of rice and wheat held in state-owned stores are adequate. But with state-level elections coming up, what else are they going to say?

"There is no point in pressing the panic button," said the country's Finance Minister, playing down the potential effect of the drought on economic growth.

The government are already being urged to release some of these stocks onto the open market. After buying a record amount of wheat in excess of 25 MMT on the domestic market following the harvest in March/April, the quantity of wheat left in private hands is fast diminishing.

"There is hardly any wheat stock left with the private trade in the open market," said the president of an Indian Flour Millers Association last week.

Compare this map of Indian rainfall this monsoon season here, with a map of where winter wheat is grown here.

A beneficial weather outlook for the week ahead has been one of the main factors driving prices lower over the last few sessions. US weather analyst Gail Martell of Martell Crop Projections has got this to say about weather prospects and the likely impact on crop development this week:

Corn and soybeans: Wetter Midwest forecast

A couple waves of showers are expected this week that will greatly improve field moisture for soybeans and corn, a welcome welcome change from the dryness of the past 3-4 weeks. Showers doused key corn states Iowa, Minnesota and Nebraska on the weekend. Soybeans are in the midst of the critical pod setting and filling stage and would benefit most from drenching rains. Corn is advancing rapidly from kernel-filling into the dough stage after a week of very warm temperatures.

Beneficial rain over the weekend: Western Corn Belt states Iowa, Nebraska, South Dakota and Minnesota were hit with strong thunderstorms Saturday that boosted field moisture. Most rainfall amounts were .5-1.5 inches but locally 2 inches of rain occurred. Thunderstorms fired up again Sunday along a slow moving front in Kansas, northern Missouri and northern Illinois, but showers petered out in Indiana and Michigan last night. See the accumulated August rainfall map (attached). The Monday-Wednesday rainfall is expected to be heaviest in a band from Kansas to Illinois, as this slow moving front grinds south and east across the Midwest. See the attached 3-day forecast outlook.

Heavy rain a possibility late in week: Additional strong thunderstorms may develop again later this week in the Midwest when another strong Canadian trough drops into the Midwest, reinforcing and strengthening the initial trough. The European Model (see attached map) indicates a very wet pattern for late this week, especially if tropical moisture from Claudette is entrained into the trough. The GFS model sees a less-wet forecast on Day 5 (Friday). If we believe the European Model, Mid South soybeans would get drenching rain, along with the Midwest.

Spring Wheat: Dampness stalling harvest

Damp conditions are slowing down grain drying and stalling harvesting in North Dakota and Western Minnesota, and the forecast is ominous for more of the same. Thirty percent of ND wheat was still green on August 16th, which is at least 2-3 weeks behind schedule. North Dakota wheat ratings are impressive, 88% good-excellent and only 2% poor, but getting the crop harvested is proving to be very difficult due to delayed maturity and persistent dampness. Warm and dry weather may not resume until the weekend. The USDA say that only 3% of ND wheat was harvested August 16, well behind the 43% five year average.

September corn closed at $3.14 ¼, down 5 cents, whilst prices were lower this was some way off session lows set earlier in the session. Weak crude and stocks and a firmer dollar weighed on the entire complex from the start. The crop progress report continues to indicate that although conditions remain good, progress is lagging, with only 40% of the crop at the dough stage, compared with 64% normally. The crop was 9% dented, below the average of 26%, although good to excellent ratings held steady at 68%.

Soybeans

September beans closed at $9.88, down 36 ½ cents, whilst November finished at $9.54 ½, down 27 cents. An improved weather outlook, combined with unfavourable outside influences got beans off to a defensive start to the week. Export inspections were 5.62 million bushels, compared to last week’s 10.082 million bushels. The crop progress report pegged 66% of the crop as good to excellent as of Sunday, unchanged from the previous week, with 72% setting pods compared to 85% for the five year average.

Wheat

September wheat finished at $4.71 ¾, down 10 cents, making new contract lows on the spot month of all three US exchanges. Spillover weakness from beans weighed on wheat, along with a firm dollar and weak crude oil. Export inspections were 13.915 million bushels, towards the low end of trade guesses. The crop progress report showed 94% of the winter wheat is harvested, in line with normal. However only 13% of the spring wheat crop is harvested compared to 33% last year and 48% for the five year average. Commodity funds added to their short positions, selling an estimated 3,000 wheat contracts today.

After a year of pratting about over whether to have some cutting-edge Nogger content on their website, UK milk-buyer Milk Link finally bit the bullet last week and emailed me to say that they've got the go ahead.

"However this would need to be on the basis of a 6 month free trial with the option to continue past that period at the price that you’ve already indicated. Could you please confirm that you would be in agreement with this and reply to my colleague Steve X also," they said.

Well, I thought, they only reported £10 million in pre-tax profits in June, things must have taken a pretty dramatic downturn since then.

I strangely felt compelled to decline their generous offer of six months work for such a handsome sum. I also felt moved to pen this missive to their customer services dept., although I don't hold out much hope of a reply:

Hi there,

I'm in the market for some milk and wondered whether you might be interested in supplying me?

All the papers keep telling us that we're in a buyer's market, whether it's houses, cars, whatever. So, hell, why not milk as well I thought?

Here's the deal, I'm looking for you to supply me with free milk for the next six months. If I like your milk, then I'd be happy to consider paying for it after that. Sounds like a fair deal to me, what do you say?

Could you please confirm that you would be in agreement with this, so I can crack on and cancel my existing order. Arthur, my local milkman, simply isn't in touch with the ever-changing super-competitive market in which we now find ourselves. He also makes a bit of a noise some mornings, which I find most irritating. It's a dog eat dog world we live in, as Arthur is shortly about to find out, and if I hear one more time about his wife's impending hip operation then I think I'll scream.

We're not mucking about here, we're talking two or three pints of the stuff every day, and more at Christmas, so it's quite a big order. I've got Arla and Dairy Crest chasing me for my business, but I thought I'd give you first shout.

The overnight eCBOT market closed sharply lower with wheat around 10c lower, corn down around 6-8c and beans 25-32c lower.

A stronger dollar and weak crude oil set a bearish tone to the start of the week. European stocks are lower and Wall Street is expected to follow suit.

Large spec funds added to their shorts in CBOT wheat last week, according to CFTC data. They also modestly reduced their short positions in corn.

The weather forecast for the week ahead includes plenty of rain for the Midwest, whilst temperatures are cooling down, there is no sign of a frost just yet. Not so on the Canadian Prairies, where growers are expected to have woken up to frost this morning.

Large parts of the EU wheat harvest are already completed, and the USDA will report tonight on how the US spring wheat harvest is going. Also we will get the latest on crop condition and development for corn & beans.

Rain is needed in Argentina, where wheat plantings are the lowest in over 100 years, as the crop reaches the head filling stage. El Nino hasn't shown up in Australia yet, and wheat production estimates there are inching up. September/October is the critical time for wheat development Down Under.

Early calls for this afternoon's CBOT session: corn called 5 to 7 lower; soybeans called 20 to 25 lower; wheat called 5 to 10 lower.

In a piece of stunningly bad PR, drinks giant Diageo - amongst many other things the world's biggest whisky producer - has decided to sue Sainsbury's according to a report on Reuters.

Millions of Diageo products, from Guiness to Gordon's Gin, are probably stacked on Sainsbury's shelves right now. But that hasn't stopped uber-sensitive Diageo, manufacturer of Pimms, from saying that Sainsbug's Pitchers drink "infringes its intellectual property rights".

Diageo are certainly in the news at the moment, after coming under fire from the Scottish NFU last week when it was revealed that they'd imported 3,000 MT of Swedish malt into Scotland last Wednesday.

How's your knowledge of ancient Roman satirical poets then? Similar to mine then. No I've never heard of Juvenal either, but apparently he lamented that, at the end of the day, everything boiled down to just bread & circuses.

My sources tell me that the Russian grain crop is getting bigger, not smaller as the chumps at the USDA forecast last week. Reports of widespread drought damage in the Urals (Mrs Nogger#1 had widespread damage in the Urals, but that's another story), have been deliberately over estimated by local government in an attempt to con extra compensation out of Moscow. Fancy that, a Russian being economical with the truth. Nogger's crystal ball tells him that local forecasters will increase their production estimates this week.

Oooooooooooooohhhh....

The voices circulating inside my head are also telling me that it's strange that China, who you will recall were suffering from the worst drought in more than fifty years back in February, should eventually pull off a larger wheat crop than last year. Back then Dow Jones published a a news report that said Chinese wheat production would be down 10% this year "in a best case scenario" going on to say that irrigation can only help 60-70% of the crop. Now, miraculously, production this season will come in 2 MMT higher than last year at 114.5 MMT, say the gullible USDA, who appear to have swallowed it hook line & sinker. I wish the USDA was my girlfriend. The Chinese telling porkies, whoever would have dreamt up such an absurd suggestion.

Ooooooooooooohhhh....

Get your woolly gloves and hats out, Jacky Jack Frost is set to put in his third appearance in a week on the Canadian Prairies Monday, according to QT Weather. It won't quite make it into the northern US Plains though, temperatures here will get down to the mid to low 40's, they say. It felt like a frost wasn't too far away for bloody North Yorkshire yesterday either. What happened to the long hot BBQ summer then? I'm forecasting four foot of snow for the Bank Holiday weekend at the end of this month.

Oooooooooooohhhh....

My spirit guide has exclusively revealed to me the menu for next year's GAFTA Dinner, how spooky is that? And categorical proof, should anybody out there doubt it, that I am in direct contact with voices from beyond the grave. Next year's menu will include, flatbreads, rosti potatoes and crepes. Anything that can be slid under a door easily basically.

Oooooooooooohhhh....the voices are fading....what's that, Everton will win the Premiership, despite an unlucky against the run of play defeat on the opening day of the season? I think we must have a crossed line with the spirit world, I'm going to hang up now.

About Me

Worked in agriculture for over 30 years as a shipper, merchant, trader & broker, but still hasn't got the faintest idea what he's talking about.
Likes beer apparently, so why not do the decent thing an hit the donate button you tight bastard?
He can also provide content for your website like market reports and commodity prices. And if you haven't got a website he can design one for you. In short, the man's a bloody genius.

Disclaimer

All comments on this website are the sole opinion of the author, and are not capable of nor intended to constitute professional advice. Neither can Nogger give any guarantee for the accuracy of any of the information or data contained within this site.

The guy is clearly deranged and you should almost certainly ignore everything that he says.